Nigeria’s flagship crude, Bonny Light, has shown signs of stabilization following a sharp decline in the global oil market largest in nearly three weeks, driven by broader global oversupply fears.
Bonny Light last traded at $65.77 per barrel, down 2% from late November highs around $66–$67.
Nigerian crude has been averaging at $65.5 a barrel this month, down from $70.20 in September 2025.
This is well below Nigeria’s 2025 budget benchmark of $75 per barrel, straining fiscal revenues.
Brent crude traded slightly above $62 per barrel after falling 2% on Monday, while West Texas Intermediate was close to $59. The International Energy Agency and OPEC are expected to provide reports later this week, and the Energy Information Administration is scheduled to release its Short-Term Energy Outlook on Tuesday.
Next year is expected to see a record surplus, according to the IEA, and traders will be watching for any shifts in market expectations. Since the beginning of November, crude has been trading in a narrow $4-per-barrel range as investors consider the effects of sanctions against Russia and the possibility of export restrictions.
The glut in focus: Supply vs. demand imbalance
Global oil markets face pressure from an oversupply, or ‘glut,’ expected to worsen in 2026. Key drivers include:
- Supply Surge: OPEC+ increased targets through December 2025 but paused hikes until March 2026 due to seasonal weakness. Non-OPEC output (e.g., U.S., Brazil) is booming; global supply growth reached 3.1 million bpd in 2025 and 2.5 million bpd in 2026.
- Nigeria’s production increased to 1.40 million bpd in October from 1.39 million bpd in September but remains 32% below the 2025 budget goal of above 2 million barrels per day
- Growth slowed to 0.8 million bpd in Q3 2025 (0.7% YoY), below pre-2020 averages. Expectations of a glut have been signaled since December 2023.
- China (a key buyer) added 0.8 million bpd to strategic stocks through September but is easing its pace; U.S. inventories may have fallen last week, according to Reuters polls, but overall builds are expected.
The IEA projects a surplus of 2.3 million bpd in 2025, increasing to 4.09 million bpd (4% of demand) in 2026. The EIA reports inventory up by 1.8 million bpd in 2025, rising to 2.2 million bpd in 2026 (peaking at 2.7 million bpd in Q4 2025–Q1 2026).
This has caused Brent and WTI prices to enter contango, with prompt prices below future contracts.
The crude oil market surplus is expected to increase in 2026, with supply exceeding demand by more than 2 million barrels per day. Markets forecast Brent crude can likely average at $57 per barrel throughout the year, with the main premise being that Russian oil flows will continue unabated despite US sanctions.
Brent fell 0.3 per cent to $62.31 per barrel for the February settlement. WTI dropped 0.4% to $58.66 per barrel for January deliveries.
India, the largest consumer of seaborne crude from Moscow, plans to cut back on its purchases, which will probably be a major topic of discussion during this week’s trade talks with the United States.
Russian President Vladimir Putin visited India last week demonstrating the strengthening of relations. In other areas, the ongoing assaults by Ukraine on Russia’s energy infrastructure pose a threat to the production of crude and its export into larger markets.
